By Anthony Luppino
1. DON’T MAKE FINANCIAL MISTAKES
Some of the most common money errors are easy to avoid if you:
-Set goals. Don’t make knee-jerk investments. Establish and follow your financial plans.
-Stay liquid. Plan ahead to avoid probable cash-flow problems, especially those you know will occur (i.e., auto repairs, college costs).
-Pay off credit cards. Eliminating 10%-18% interest is like earning the same amount risk-and tax-free. Always pay more than your minimum balance. Reducing the principal will reduce the interest too.
-Pay off car loans, even though your interest rate may be low. Leasing, despite some benefits, provides no equity.
-Debunk the myth of “enough.” Believing more money will solve all your financial problems may keep you from managing the money you have. Having more money rarely results in less financial uncertainty.
-Use 403(b) tax-sheltered annuities. With less tax due, your contribution acts as a tax deduction that partially pays for itself. Plus the tax deferral of investment income you will earn is a long-term
-Diversify. Divide your investments among stocks, fixed-income plans, and cash. Having all your money in one kind of investment (CDs, money market, etc.) may put you at unnecessary risk or cause you to miss lucrative opportunities.
-Make a will. Don’t let the courts decide your children’s future or how to divide your estate. Hire an attorney, and update the will as circumstances change, at least every two years.
-Don’t let fear convince you to do nothing. Even if you have everything in a savings account for safety’s sake, you really do lose when you figure for inflation and taxes.
2. TIPS FOR HIRING A MONEY MANAGER:
Financial services companies are impartial, and can audit a management firm’s track record.
-Choose a company and person with a consistent success record.
-Look for experience. Let newcomers practice on someone else’s money.
-Be sure you like the manager’s decision-making, risk-taking, and investment style.
-Review your manager’s performance quarterly with your financial services company.
-Don’t expect miracles overnight. Effect money management takes three to five years to see real results.
In Pastor’s Tax & Money (June 1993) and from Anthony Lupino, a senior financial consultant for Merrill Lynch, in Sales and Marketing Management (February 1994).
Christian Information Network.
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